Manufacturing sector sentiment improves in July

Taipei, Local manufacturing sector sentiment toward the business climate improved in July at a time when the electronics industry has entered a peak season for the year, the Taiwan Institute of Economic Research (TIER) said Friday.

TIER, one of Taiwan's leading think tanks, said the July composite index for the manufacturing sector rose 1.35 points from a month earlier to 101.74 as many export-oriented manufacturers benefited from solid global demand for tech devices in the month.

The latest composite index for the manufacturing sector came after Taiwan reported an almost 5 percent year-on-year increase in exports in July. In the month, Taiwanese electronic component firms sold US$9.33 billion-worth of goods overseas, up 7.2 percent from a year earlier, on the back of solid demand for semiconductors, exports of which increased 7.0 percent year-on-year to US$7.97 billion.

In addition, the industrial production index for July rose 4.43 percent from a year earlier with the sub-index for the manufacturing sector, which accounts for more than 90 percent of the total, up 5.01 percent in the month.

The index for the property development industry rose 0.87 from a month earlier to 98.51, the TIER said, adding that the small increase showed that high temperatures slowed the pace of construction projects, but home buying rose, as many buyers rushed to enter the market ahead of Ghost Month on the Lunar calendar, which started Aug. 11 and will run through Sept. 9.

In Taiwan, consumers tend not to buy big-ticket items such as homes and cars during Ghost Month because of superstition that buying at this time will cause bad luck.

TIER said the composite index for the local service sector also moved higher in July, up 3.38 from a month earlier, to 100.43.

The think tank said the improving sentiment of many firms in the local services sector resulted from a peak-season effect during the summer vacation as many vendors were keen to launch promotional campaigns to boost consumption.

In addition, 26.2 percent of manufacturers polled in a TIER survey said the business climate improved in July, down from 27.1 percent in a similar poll in June, while 20.5 percent said the business climate deteriorated, down from 23.3 percent a month earlier.

Asked about the next six months, 24.0 percent of respondents in the manufacturing sector in July said the business climate will improve, down from 26.8 percent in June, while 15.5 percent said the climate will decline, down from 16.3 percent in the June poll, according to TIER.

Despite the improvements in sentiment of both of the manufacturing and service sectors in July, TIER President Lin Chien-fu (???) said local businesses should keep alert over an escalation of trade friction between the United States and China.

Trade disputes between the two top economies in the world are expected to affect global demand in the second half of this year, which could have an adverse impact on Taiwan's exports and eventually hurt local consumption, Lin said.